Wednesday, August 04, 2010

When Barnes & Noble announced late yesterday afternoon that its board was putting the 720-store chain on the market, The New York Times reported that it could mean trouble for an industry that is already flailing under signs of great change:

The news surprised analysts and alarmed publishers, who have watched as the book business has increasingly shifted to online retailers and e-book sales, leaving both chains and independent sellers struggling.

Barnes & Noble, the country’s largest book chain with 720 stores, said that its board believed the stock was “significantly undervalued” and that it had set up a special committee to review its options.

Nor have the challenges come only from online:

For years, Barnes & Noble has been battered by large shifts in the publishing industry and the retail environment. Book sales have moved toward big-box stores like Costco, Wal-Mart and Target, and away from mall-based stores like B. Dalton, which Barnes & Noble acquired in the late 1980s.

“There’s been a long series of pressures,” said David Schick, managing director at Stifel Nicolaus in Baltimore. “The market has not been kind to bookstores, and it’s for new reasons like competition with Apple and Amazon, and it’s for old reasons, like what we believe has been a decline in reading for the last 20 years. Americans have devoted less of what we call media time to books.”

Despite a possible price tag of around $700 million, there are some potential buyers on the horizon. Barnes & Noble chairman, Leonard Riggio, told The Wall Street Journal (subscription required) that he was considering putting together a group of investors. And major B&N investor Ron Burkle who currently holds 19 per cent of the company, has been trying to gain a larger share.